Over a third of Americans rent right now, yet most say they would rather own the property they live in. Making the leap from renter to owner can be difficult, especially if you’re not prepared.
These are the steps to follow to become a homeowner and stop having to pay landlords.
What is your credit score right now? When questioning ‘should I rent or buy a house?’ it’s a good idea to consider how different the credit score expectations are between the two. For example, you can rent with a score that sits at 640, but when you’re buying a home, if your score is below 700, you’ll be paying far higher interest rates than you may want to.
Take a year or two to build your credit score until it’s one that you want. This means paying off any debt, making credit card payments on time, and reducing how much of your credit you use. Over time this can boost your credit score to a number you’ll be happy to see.
Saving is difficult, especially if you’ve spent years renting and haven’t been able to invest in anything permanent. Over 50% of consumers have to live paycheck to paycheck, which makes saving hard to accomplish.
If you want to break this cycle, use whatever extra income you can, and push it into a savings account that either takes several days to withdraw from or has a pretty low withdrawal limit. Then, over time keep dropping small amounts or whatever you can afford to drop into here.
Another way to increase how much you can save up is to increase how much you make. It can be difficult to make more money, and getting a second job isn’t in the cards. Instead, try to create a passive income for yourself.
One way you can do this by writing and publishing ebooks, and listing them on sites like Kindle. Writing well and doing this often enough will slowly earn you a passive income that will eventually become something that helps you afford a home. Ensure that you tuck most or all of this extra income into your savings, but report it for taxes when tax season comes.
There are numerous grants, programs, and organizations that help young and first-time homeowners. If this is you, try to seek out what’s available in your area.
Some cities offer programs for specific careers, like Houston showing to pay the downpayment of any teachers buying their first home, and others provide perks like covering closing costs.
If you’re having trouble finding any programs that suit you or that you’d be interested in going through, talk to a realtor or real estate agent about what might serve you. Although you’ll have to pay them three to six percent of whichever home you buy, they can guide you through the steps to buying a home and help you avoid any missteps.
You deserve a home you can call your own and gain money back from you don’t have to rent forever.